The Ticker

The Ticker: Arko Plans U.S. IPO of Its Filling Station Business

Declining bond prices spur mutual fund redemptions; Kardan reaches bailout pact with bondholders.

Bloomberg

Arko Holdings said yesterday it is gearing up to float shares in its GPM unit, which owns and operates most of its U.S. filling station business, in an initial public offering valuing the company at between $300 million and $400 million. GPM will be restructured as a master limited partnership – a publicly traded company that offers the tax benefits of a limited partnership – after which Arko will offer a one-third stake. The move comes as GPM has reached a scale that justified a restructuring, with sales now topping 550 million gallons annually. Meanwhile, the company said it has signed a binding agreement to buy 43 filling stations, mostly in the U.S. Midwest, for $39 million, which will bring the number of stations it operates to 640 and add $330 million in annual revenues. Arko wants to use the proceeds to finance further expansion of its U.S. business after it raised 123 million shekels ($31.5 million) in the Israeli bond market last month. Arko shares closed up 0.6% to 70 agorot. (Eran Azran)

Declining bond prices spur mutual fund redemptions

The drop in bond prices spurred an exodus of some 1.1 billion shekels ($282 million) from Israel’s mutual funds last week, nearly three times the level of the week before, Meitav Dash reported yesterday. Traditional mutual funds saw redemptions of 1.3 billion shekels, their biggest since Operation Protective Edge over the summer. The biggest drops were suffered by bond funds, as the Tel Aviv Stock Exchange’s General Government Bond index dropped 0.6% last week and corporate bonds indices as much as 1%. F10/90 funds, invested mostly in bonds with a small weighting toward equities, says redemptions reached 580 million shekels, while government bond funds lost 300 millions. “It appears the fuel that powers the rise in corporate bond prices – mutual funds’ raising capital – is coming to an end as the public moves into funds focused on overseas investments,” said Dudi Resnick of Leumi Capital Markets, attributing the change to the depreciation of the shekel. (Dror Reich and Omri Zerachovitz)

Kardan reaches bailout pact with bondholders

Kardan NV and its bondholders are close to an agreement easing terms for the real estate company’s 345 million euro ($430 million) debt. At a meeting over the weekend, bondholders agreed to a two-year grace period before the company must repay its Series Aleph and Bet bonds coming due next February. In return, Kardan agreed to give bondholders a 12% equity stake in the company, two percentage points more than it originally offered, and raised the interest rate on the bonds to 1.875% from 1.5%. Among other concessions, Kardan agreed to limit its business-expansion activities, set aside 50-60% of all asset sales to repay bondholders early, and reduce management costs to 4.5 million euros a year from the current 8 million. The agreement must still be approved by the six institutional investors that hold the bonds, as well as by Kardan shareholders. Kardan NV shares dropped 8.1% to 1.09 shekels. (Yoram Gabison)

Tel Aviv stocks and bonds end lower

Tel Aviv shares ended lower and corporate bonds lower still yesterday after a washout on Wall Street and Europe over the weekend. The benchmark TA-25 index slumped 0.7% to end at 1,476.83 points, while the TA-100 lost 0.6% to 1,309.98. Turnover jumped to 3.23 billion shekels ($827 million), nearly 10 times its Sunday average, as the rejiggering of the Tel Aviv Stock Exchange’s main indices forced investors to realign their portfolios. Corporate bonds were down sharply, with the Tel-Bond 20, 40 and 60 indices losing as much as 0.75%. Africa Israel’s Kaf-Vav series dropped 6.15%, raising its yield to 17.5%, and Jerusalem Economic’s Yud-Bet debt tumbled 6.8% to 8.17%. Teva Pharmaceuticals dropped 3.5% to 216.30 shekels, even after Sterne Agee upgraded its shares to Buy from Neutral on Friday. Israel Chemicals rose 1.8% to a close of 28.10 shekels after potash competitor Uralkali said a sinkhole it was grappling with at its Solikamsk-2 mine was growing bigger, renewing speculation that it would have to curtail production. (Omri Zerachovitz)